Japanese Yen movement was influenced by Japanese banking rumors, with speculation rife that a Japanese institution could be in trouble. The source of the talk is centered on a Kyodo news story that said the Japanese government has decided to buy around Y20 trillion of bank shares. The story may have exacerbated the earlier price action, which saw EUR/JPY rally sharply to hit a 131.04 peak before turning back in to the 129.00 area. It's not clear what the implications are. A number of Japanese banks have been adversely affected by the heavy equity market losses, with capital ratios being hit hard, which would mean measures to raise capital. If Japanese banks need to raise capital then there could be a retrenchment in overseas investment and may be a supportive JPY factor in the near-term.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
